If President Obama could enact legislation that was as powerful as his speeches, the recession would be a distant memory and there would be good, high-paying jobs a-plenty for us all.
On Tuesday morning, the president delivered an effective speech summarizing the economic situation he and his team faced on Inauguration Day, the actions taken so far in his first year, and his plans to boost job creation in the near-term. The president is by far the most convincing spokesman for his administration's economic policies -- neither Larry Summers, Tim Geithner nor Christy Romer can touch him in terms of either clarity or forcefulness.
But the substantive proposals rolled out in the administration's new three-pronged jobs plans add up to pretty small beer when compared with either the president's rhetoric or the challenges faced by the U.S. economy. Obama announced a series of tax cuts and incentives aimed at small businesses that sound remarkably GOP-friendly, called for another round of infrastructure spending, and promised to expand programs aimed at improving energy efficiency and boosting clean energy technology development. There's nothing wrong with any of these proposals, and there may even be some money for them, if the administration is able to follow through on its plan to employ unused TARP funds for job creation. But taken all together, they constitute little more than tinkering at the margins. Obama put no dollar figures on his call for new infrastructure investment, and Congress appears largely unwilling to take any ambitious new steps.
This does not necessarily represent an administration failure. As the president eloquently outlined last week, he faces a remarkably difficult puzzle: The economy needs to grow to have any realistic hope of reducing the deficit, but government measures aimed at boosting the economy will by definition further increase the already formidable deficit in the short term. Caught in that vice-grip, there is little maneuvering room for anything besides margin-tinkering.
Our best hope is that, in the absence of any new great shock to the economy, a fragile recovery gradually strengthens, boosted in some mild fashion by the various tweaks and initiatives the administration is now proposing. And our main reason for encouragement? Things don't look quite as bad now as they did a year ago.
From the speech:
Almost exactly one year ago, on a cold winter's day, I met with my new economic team at the headquarters of my presidential transition offices in Chicago. Over the course of four hours, my advisors presented an analysis of where the economy stood, accompanied by a chilling set of charts and graphs, predicting where we might end up. It was an unforgettable series of presentations.
Christy Romer, tapped to head the Council of Economic Advisers, and Larry Summers, who I'd chosen to head the National Economic Council, described an imminent downturn comparable in its severity to almost nothing since the 1930s. Tim Geithner, my incoming Treasury Secretary, reported that the financial system, shaken by the subprime crisis, had halted almost all lending, which in turn threatened to pull the broader economy into a downward spiral. And Peter Orszag, my incoming Budget Director, closed out the proceedings with an entirely dismal report on the fiscal health of the country, with growing deficits and debt stretching to the horizon. Having concluded that it was too late to request a recount, I tasked my team with mapping out a plan to tackle the crisis on all fronts.
For now, a second Great Depression has been averted, the financial system has been stabilized, and remarkably, deficit projections have consistently shrunk from the initial $1.8 trillion estimate for fiscal year 2009. That's something, at least.